Three years ago, less than 1 percent of recommendations made by stock analysts were the one-word directive that Wall Street hates to utter: Sell.

Today, nearly 11 percent of all recommendations are sells. Furthermore, at more than half the nation's major brokerage firms, sells represent 15 to 25 percent of their overall opinions.

That's a good start, but you can't expect miracles.

Many firms still cling to the practice of keeping their sells at 6 percent or less of total recommendations. This means many of their hold ratings should really be considered sells. Another time-tested trick is to stop coverage of a company's stock altogether so the "s" word can be avoided.

The trend toward "telling it like it is" wasn't prompted by a change of conscience, but rather a desire to stay out of jail. Government and the industry cracked down on firms due to highly-publicized instances in which analysts touted shares of company clients that they knew were dogs.

"Because of NASD [National Association of Securities Dealers] rules enacted last fall, investment firms must now say how many of their recommendations were buys, holds and sells," explained Charles Hill, director of research for the Boston-based First Call research firm that tracks analyst recommendations. "They must also say what percentage of those recommendations are investment banking clients."

In addition, there's a requirement that investment firms produce a three-year price chart showing previously published recommendations and target prices.

There can be many reasons why a stock should be sold. It may have become overpriced relative to the normal yardsticks used to determine value. It may have significant troubles. Either way, the analyst should present a realistic view to investors.

Investor psychology can also delay the sale of a stock.

Many people are unable to sell stock given to them when they were youngsters or that was originally bought by a relative who is now deceased. Many have held a stock for so long that it seems like an old friend. Others own far too much of their employer's stock out of a sense of loyalty.

"Many investors rationalize owning a stock all the way down as it declines, which we saw a great deal in 2000 with technology stocks," said Paul Nolte, director of investments with the Hinsdale Associates investment management and financial planning firm. "At $80 a share it was a great deal, at $40 it was still terrific, and at $20 they didn't want to sell because they felt it couldn't get any worse and they felt bad about how much they'd lost."

"A solid reason to sell stock can be for tax purposes at year's end so you can do some tax-loss selling," pointed out David Bendix, certified financial planner with Bendix Financial Group in Garden City, N.Y. "Or the fundamentals of the company may have changed, it may have become too expensive, or you realize that you made a big mistake in buying it in the first place."

There might be a desire to diversify your portfolio or seek a better investment opportunity.

"One good reason to sell is that a company no longer provides you with the same character that it did when you bought it, in terms of how it's operated, its franchise, its plan for growth and how it intends to meet its goals," said James Paulsen, chief investment officer with Wells Capital Management in Minneapolis.

The same logic holds true when deciding whether to sell shares in a mutual fund. Carefully examine what the fund has done for you lately.

"There's often investor inertia about selling mutual funds because there's hope that things will improve or at least stop getting worse," said Sheldon Jacobs, editor of The No-Load Fund Investor (www.sheldonjacobs.com) in Irvington-on Hudson, N.Y. "But before doing anything, the investor should ask if anything's gone wrong with the fund, such as a change in portfolio manager, and should also compare its performance to that of its peers."

Finally, on the other side of the coin, here are some important reasons why you shouldn't sell a stock:

- You're responding to short-term news such as quarterly earnings that doesn't reflect the long-term picture.

- You're trying to time the overall market and overlooking basic fundamentals of the individual stock.

- You can't deal with the fact that even excellent stocks sometimes go down and you're selling based on sheer emotion.